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News/Business. Ross Westgate, Kelly Evans. Ross Westgate and Kelly Evans consider the business stories that have global significance. New.




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Spain 29, U.s. 24, Europe 18, Us 12, Euros 11, China 10, France 8, Pennsylvania 5, Chicago 5, Paris 5, Hoveround 4, S&p 4, Mary Jo 4, Steve 4, Asia 4, Sony 3, Heineken 3, Ronald Reagan 3, Hong Kong 3, Madrid 3,
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  CNBC    Worldwide Exchange    News/Business. Ross Westgate, Kelly Evans. Ross Westgate and  
   Kelly Evans consider the business stories that have global...  

    September 28, 2012
    4:00 - 6:00am EDT  

while consumer prices slipped further in august raising fears the world's third biggest economy could yet fall into recession by year end. what a big day. >> super friday. >> we have the french budget proposal, the results of the spain audit/stress test, we've got, what else -- it's the end of the quarter. britain is announcing it libor reforms. >> that's not what i was talking about. it's the ryder cup, folks. forget all that stuff. >> by the way, i had to google the ryder cup. >> far more important event. >> we'll talk about that later in the program. >> i don't know who insisted on
that, but apparently we are going to cover it. >> before we get to that, the government of hollande is about to present it first budget. its expected to whicheverdelives of tax hikes. meantime european policymakers are appraising spain's reform plan. but today the government must brace for the results of the banking stress tests that will determine the recapitalization needs of the country's most troubled lenders. we have steve sedgwick following the story in thmadrid, but firs out to stefane in paris. it sounds like there will be a contrast with the spanish budget. it's tax hikes that seem to be the focus. >> in france it will be focus on tax hikes. that's the decision about to be announced by the french government. basically 20 billion euros in additional taxes in the budget for the next year. and only 10 billion euros in
spending cuts. that's the plan to reach the deficit target. that's the best case scenario because the budget is based on a growth assumption of 0.8% which seems to be far too optimistic. plenty of private economists believe the french economy won't grow more than 0.3% next year. in that case, the government will need to find an additional 5 feweuro of spending cuts on t of what will be announced today. the budget will include one very symbolic measure, new tax rate of 75% for people earning more than 1 million euros per year. it will be implemented only on around 2,000 people and it will raise only 200 million euros. so that's a symbolic measure that the prime minister has been clear already saying that it was a patriotic contribution to help the country recovery. also the government will confirm
today probably that the bracket for the income tax in france won't be adjusted anymore to the inflation. that seems to be technical, but it means that with the same salary next year, people here will pay much more taxes than they used to pay. so basically, yes, it's focused on a tax increase. it's really important for the french government to meet the deficit target, the 3% public deficit target for the next year, because failing to reach this target would put france in a difficult situation. so far the country has been treated really well by the markets if you compare for instance with spain, but failing would put them in the same situation as spain and italy. >> where are you standing there and when are we expected to get the details of the budget? >> the budget will be presented at the weekly committee meeting in the next couple of minutes, but we don't have any public
announcement only later this afternoon here at the budget ministry. the budget finance and budget minister will unveil the details. so this is where i'm standing right now and this is where we're going to have the details a bit later in the afternoon. >> we'll watch for all that. stefane from paris for us. let's swing over to steve sedgwick in madrid. and your location has seen protests, has basically been one of getting a sense of what the public is looking at. now you're at the stock exchange there. it seemed as though the initial response was positive, but is the after glow already fading? >> yeah, i think basically people are generally quite pleased about this budget is designed to potentially have less conditionally if and when there is a need for a sovereign bailout. one of the greatest ironies i think of the last 24 hours in terms of reaction has been the european commissioner who said,
yes, this is spot on, spain. to my mind, i think brussels has been working very closely with the spanish government looking at the various measures included within this budget which will bring spain into line with any conditionality were there to be a sovereign bailout. i.e., spain can say we did it first, this is our move, not what we're being told to do from outside. and that's important if rajoy. so people are concerned about how stretched some of the numbers appear to be.fif rajoy. so people are concerned about how stretched some of the numbers appear to be.oif rajoy. so people are concerned about how stretched some of the numbers appear to be.rif rajoy. so people are concerned about how stretched some of the numbers appear to people how stretched some of the numbers appear to be. in terms of bank stress test today, there is a degree of cynicism about this because all it can be like previous pan european bank stress testses, all it can be is a snapshot, because that would presume otherwise that nothing was going to change. it would presume housing markets are still on a downward trajectory, assume that bank debt isn't going up, assume
there wasn't who are capital flight coming in. and that the bank that is being set up as part of the loan of this money to those banks would take assets at the current values rather than a level which means the banks have got to take a hit on it. and it also assuming that the banks can go to the capital markets to raise their money. there are an awful lot of assumptions into this snapshot. so i would certainly take today's announcement with a little pinch of salt, although any clarity on the state of the banks and their finances is much needed. back to you. >> thanks very much for that p. let's now bring in kit. global head of foreign exchange strategy at societe generale. welcome. yesterday we had this moment of waiting and waiting for the details of the spain budget. they finally come out. this afternoon could be the same thing. but just step back for a second here. are investors going to it take some encouragement from what we're hearing o does it leave
us something to be desired? >> it leaves us know wlag we knew already. spain is doing what it needs to get money without too much conditionality, but they'll get austerity one way or the other. same with the stress test. the bank will need more money. it was lost in a housing bubble. that's part of ancient history. what we're left with is the absolute stunned certainty of recession continuing, public finances not improving quickly, and no plan for growth anywhere in europe. >> so last night, egan jones comes out after spain's budget and basically the first line say hooveresque. spain has an unemployment rate near 20% and yet imposing tax
increases to reign in its budget deficit. down krgrades the country. >> because they simply don't believe that this is a viable plan. and here you have the whole debate. do you ease fiscal policy or tighten fiscal policy to get your deficit down even though that you you know that that will hit growth. please can we have a weaker currency. no. >> and here's a clue. do investors care whether it's viable plan in those terms as long as at some point the ecb acce steps in. >> right now, they don't care. we buy the news of a good plan and then it's friday at the end of the month that people mind. we've been so bearish for so long about all things euro, europe, spain. but you don't buy spanish equities forever. >> ibex up 10%, euro-dollar's rallied quite a way to 1.31 over
the period. it hasn't been a bearish couple months. >> i think this is called bears capitulated left, right, center and perhaps over here in this corner, slowly being forced out of bearish positions by the belief that, see, i knew this was going to happen. look at the japanese data. look at american durable goods orders. how do you have this much austerity and the unemployment rate is forecast to fall next year. we all understand that and we all believe that and i think we're still squeezing bears out of financial markets. you have to see it in that perspective. there aren't a ton of people out there who think that the outlook is economic joy and happiness unfortunately. >> i wonder whether we've squeezed bears out and actually what happened the last week or so, there's a slight more bearish trade developing over these next few weeks.
>> that's what i thought about three days ago. i think there is a bearish trade developing. we are setting ourselves up for another round of fear and i'm amazed that we haven't questioned whether quantitative easing will solve our problems. >> at least in regards to spain, you look into next year, the economy is stringin ishrinking, saying when are they going to ask for the full bailout and the reaction last night perhaps muted by the fact that people said this is enough maybe to stave off the question for a few more week, but not necessary in a they don't need it at all. so what's the time line now? >> i think the time line comes with debt issuance in a sense that spain is not doing badly selling debt. but at what point can they no longer raise longer term funds from the market except with the
belief that i'll buy spanish bonds today because i know that when they ask for help, ecb will buy them and i'll be okay. >> it's pure game theory. that's what's so interesting. these aren't investment decisions being made with an eye towards long term generation of economic well. it's game theory, gaming the political theory. >> you have pension fund managers, insurance companies all around the world who need yield from somewhere. italian and spanish government bet out there, you just have to be sure they're a safe credit. >> and we will leave it there. kit, thanks very much for your time this morning. here we are, just over an hour into trade. a little bit more than that. and weighted to the up side. advancers currently outpacing decliners by a little bit less than 7:3 at the moment.
ftse 100 up 0.2%. cac 40 up 0.7%. last trading day of the quarter. ibex here we are in reaction to the budget waiting for the report of banking capitalization up half a%, as well. key is obviously interest rates are a little bit lower as measured by cash rates on the bond market. yields just a little bit below 6%. so 5.974. they have come down since yesterday. italian yields also slightly lower. ten year treasuries yielding 1.61 handle on that. as far as curse cirency market, euro-dollarer is 1.2927. dollar yep still below 78. aussie dollar hasn't moved much. sterling-dollar has had a pretty
good month. >> while we take a serious look at markets, here's a story that has people seriously worried. a drone trader has been blamed for the spike in oil back in june 2009. steve perkins, a broker at pbm oil futures, allegedly spent $520 million on oil futures contracts while intoxicateded. the trader had his license revoked for five year, he was fined 72,000 pounds as a result of the probe. pretty chilling a drunk could move markets quite that much. and what do you think about this story? get in touch with us here, @kelly_evans
or @rosswestgate. no drunk tweeting. >> to be avoided at all costs. still to come, the report on libor. he says the process is a broken system that needs a complete overall. we'll discuss that in 20 minutes time. [singing] hoveround takes me where i wanna go...
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they want prompt implementations and further thinking may be needed on the bench marks based on thinly traded markets. >> especially he says when they're quote based. so signs perhaps we're moving in the right direction. >> we'll talk about it. instead of saying we'll -- why don't they just take control of it? >> they being the fchtsa. but ultimately what does it matter. is it about who is regulating it or the nature of what's being constructed? >> we'll get into that.
first, where are we closing the week in asia. >> good morning, ross. most asian markets finished higher in the strength in chinese stocks. shanghai composite managed to he said higher by 1.5%. banks, developer, resources all gained on hopes of fresh stimulus from the pboc. we'll get the final reading of hsbc's manufacturing pmi tomorrow and the official version tomorrow, but mainland will be shut for next week for national day celebrations. hong kong market is also closed for the first two days next week and only open for trade on wednesday. the hang seng index backed up the last trading day in the green. but the nikkei didn't join the rally closing at a two week low. weak industrial production and cpi added to fears of a faster slowdown in japan's domestic
economy. there were concerns about ongoing tensions between the two countries. in south korea, samsung and hyundai assumed t hyundai supported the kospi. and index sensex heyer at the moment. back to you. >> mean while local reports suggest china security regulators been busying studying ways to increase sentiment. a possible dividend tax reduction. our next guest says she expects more policy experimentation, as well. jean, thanks very much for joining us. what do you think of this initial idea that we've got first of all about a dividend
tax reduction? >> well, that may happen after the holiday period that's coming up this weekend. we've had a series of measures coming from the chinese regulators trying to boost market sentiment. in fact those measures have been announced in the last several months, we have had an increase in the participation of foreign capital, investing in asian market, we're seeing the csrt mandating dividend payment by chinese companies. we're also seeing a larger role in the asian market. in the last two day, the asian market did reasonably well in anticipation of more measures to come including perhaps a cut in the dividend cut and also perhaps a suspension of ipos from china which will of course help shrink supply and in a time like this, that would be very welcome by the market. >> i want to ask, too, about
what's happening on the currency front this morning. we're seeing appreciation in the u.n. to an historic high basically against the dollar. how does that complicate these efforts, what sort of policy response might you expect? >> well, we can't read too much into the one day movement in the chinese currency. if you look at the year's performance as a whole, in the first nine months of the year, the chinese currency has been very stable against the u.s. dollar. in the first eight months of the year, the actual performance of the rnb has been a little disappointed. it appreciated 1% against the u.s. dollar. in the recent weeks, it's regained strength. basically between now and year end, we don't expect a lot of movement in the exchange rate. but what's complicating the chinese government policy basically is that we have a leadership transition coming up and also the leadership is very concerned still about potential inflation coming back.
so that's complicating their policy decisions in the coming months. >> do you read this appreciation as one way for beijing to experiment in ways of bringing down inflation despite the fact that a weaker currency would give more credence to their exports? >> i think that one day movement really doesn't amount to very much. in fact inflation has been on the downward trend for the past several months. last week inflation was only 2%. so near term, inflation is not a major concern. however, the chinese leadership doesn't want to ease monetary policy too aggressively to reignite inflation. now, exports of course are also a very important consideration. in the recent months, export growth has been very sluggish. last month export growth was only 2.7%. and exports to europe in particular actually dropped 13%. so at this juncture, we don't
think that chinese authorities will let the currency appreciate too aggressively. of course that would significantly dampen chinese exports if that were the case. >> how are we going to trade up to and through the leadership change? >> the chinese market will be closed for the coming week. hong kong closed for two days. so that gives the market time to digest the recent news and anticipate policy changes that may be coming after the leadership transition. the market right now is looking at the cheap valuation of chinese shares. they're trading at about 10 times pe, which is historical low. also people are anticipating some kind of market boosting sentiment measures coming out of beijing in the coming months, so therefore some investors beginning to look at shares in the consumer sector, in the
service sector. >> thanks for that. have a great weekend. >> thanks very much. will top chinese and japanese officials continue to spar over the disputed islands in the east china sea? bernie lo caught up with australius australia's former prime minister. >> you have two huge conflicting forces in wider east asia. forces of globalization bringing everyone closer together. at the same time, you have this hangover from political nationalism, which is still out there focusing particularly on sovereignty claims. challenge is to manage that and not repeat the mistakes of european history where they proceeded to slaughter each other on the average every half century. more specifically to the
disputed areas in the sea is this, you've got three ways of fixing tear tore kral dispute. one, have a war. most would agree that's not a good idea. two, you send to an international court of justice to reach an independent arbitration. i personally think that's a good way to go, but i don't think countries would accept that, but they should consider. it and the third one, which is as to buy time. but with one little condition maybe. and that is if we can possibly agree on a joint exploration extraction which distributes the wealth from the resources which lie there around the region. that may help solve the sovereignty question long term anyway. >> which is something that was brought up, but still sending boats out these days. the leadership transition in china, surely you have some point of thoughts on that. it's been a somewhat bumpy
process. not going quite according to book as we've seen with the scandal and other issues which have cropped up along the way. >> i don't think we should get overly distracted by the bo xslai scandal, call it what you will. something occurs every five or ten years or so. and this has baby a particularly spectacular one, but not particularly different to the previous ones. what i believe will happen is that ping will emerge as i believe a probably seven member standing committee rather than nine. i think the balance of forces will be strongly reformist, not just preserving where they've gone so far, but taking new steps, as well, in order to boost growth, bolster growth,
and critically bolster employment. >> interesting split the resources evenly. >> bernie lo there. stick around, because up up next, a joint venture as line ken has signed a deal. bob... oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.
investors wait the results of a spanish stress test that could put about the recapitalization bill at more than 60 billion euros. >> france's latest budget is being submitted to hollande, but can he bring down the deficit without damaging growth. and the much anticipated agreement with owe wlim plympus season sony. and consumer prices slip further in august raising fears the world's third biggest economy could fall into recession by year end.
>> european stocks are up after slim gains yesterday. budget details are being presented at the moment. and the ibex also up 0.4%. we get the capital test results out this afternoon. >> in the meantime, keep an eye on spain's ten year. a great gauge of what's happening in markets more broadly. that after show something relief in the wake of that budget last night now inching back a little bit higher. italy pretty stable at just under 5.2%. bunds and gilts benefiting a bit this morning as investors rotate in 1.45, 1.7 respectively. euro-dollar back up 1.29 this morning. euro sterling a little firmer. aussie dollar 1.0449 at the
moment. a sharp rebuke of libor saying it's in need of a complete overhaul. martin wheatley is calling for greater rig or and transparency with the way libor is set. he's also seek government enter session. mervyn king says he welcomes the proposals and wants prompt implementation. simon, welcome. these libor reforms, do they go far enough? >> there are a number of suggests which deal with the fact that there is a market benchmark and therefore there is a limit to how wide they will be involved in the process. so people might look at this and say we wanted to see the criminal sanctions, that was not the scope of this review.
if there is one area where i'd be disappointed with the conclusions, it's that it hasn't been more aggression. if you're benefiting from libor as a rate, should you be contributing to it. although wheatley has asked for the fsa to have the power in the future to enforce consume poll more aggressive. >> it was the rate at which banks wouldn't rate to each other. is it going to retain after the scandal, as relevant as it was before? >> there is the traditional role of lie brother bor as the lendi. it's possible that it will be replaced by secured. but it's also incredibly important for trade, for
dearrive der dearrive derivatives. it's there that it will be important. >> what kind of legal issues might now further come out of this? it might be slightly different going forward than the way it used to be for all of these product which is are linked to it, do you expect to leave an open area of vulnerability for further litigation? >> the problem will come at the fringes in the long dated contracts with corporate clients who signed up for these long dated contracts based on 4%, 5% medium term and now it looks like interest rates will an lot lower than that for a decade.
it may be people seek opportunities. >> exactly. you mention the idea of compulsion. and it does make sense if it's supposed to reflect rates on the ground that you have to have everyone on the ground involved in reporting it. but there is also a provision by which what banks are reporting is kept secret for three months. is that smart in your view or is some degree of opacity needed there? >> there are a couple reasons for keeping it secret for three months. the further is manipulation. if you don't know what your competitors are submitting, you you can't calculate what tomorrow's submission will do to the rate and therefore you're unable to manipulate it. so it's smart from that perspective. there is also a stigma attached to this and also a simple -- if we want more banks to participate, reasons why they don't is they don't want their
cost of funds down to the market. >> why not make it a period of a year or two or three or five years. if i'm goldman, the idea that you'll know in three months time still might influence what i do. >> wheatley was asked to do this by the chancellor. the introductory comments and first conclusions point to the new regulatory stuff standards, approved persons regime for libor. it's about regulation first. it's only later that we get to the interesting things, the market anticipates, the vast reduction in the number of submissions. and then he's basically saying there are only going to be 20 relevant rates now instead of 150. you're active in these markets. tell us what your cost is. we'll hide it from your competitors for three months.
>> suggested there may not be anymore qe and we're waiting sort of to see how funding for lending scheme is going. what's your own view of effectiveness of the later? >> the very first qe adopted in the states was aimed specifically at raising asset prices and it sully tactually s was. anybody who thinks it will have a knock on effect really has been proved wrong. and if that's what he's referring to, then, yeah, absolutely. qe is not working. about about there's massive liquidity, it's reducing the cost of capital. that will in time reduce the equity risk premium. >> are some of the banks lending mo more, mortgage rates coming
down? >> rates tonight have to codon'n for the banks to want more. the classic way is to widen the spread it is for bank lending. if funding for lending does that, even ostensibly because it's supposed to make more lending available but its only benefit is to widen bank margins, it will still make more credit available to the economy and that's what people have done after every recession. >> because there is this focus on the fact that banks might use to refinance, but again, if it widens spreads, ultimately that should flow through to the broader economy. >> there are early indications it's already improved. >> thanks for your time this morning. and tokyo is to bes were tumbling on the back of the japan/china tensions.
this comes as the latest key data showing economic growth slowing more than expected. cpi slipping for the fourth straight month in august while industrial output dropped 1.3%. a 15 month low. at the same time, the finance chief of japan reiterated his concerns over the impact of the strong yen. his successor is likely to address currency issues at the meeting in tokyo. they can't really do much about the strong yen, can they? it's got nothing really to do with japanese fundamentals. >> they can't do anything about the strong yen, you're right. arguably on a real basis it's not even that strong. bank of japan certainly would
like to bring it down. they've been complaining about the high nominal level for a while. >> so what meaningful policy can they have? >> this is a difficult situation for japan. we had 5% nominal growth. japan was in a sweet spot. i'm afraid everyone will have to scramble to revise their forecasts for 2012. the japanese economy looks like it has been hit by a train. all the indicators are down. we just had the industrial production figures out which consensus would be they would be down 0.5% and in fact they were down 1.3%, far worse than people were expecting. q2 growth came in at half the level people were expecting. q3 is now being revised down to negative territory by most observers. so it will be very interesting. because at the eiu for example, we still have a 2.3% forecast
for japan this year which would make japan the star performer amongst the industrialized countries. but i'm afraid we're going to be forced to reduce that forecast and i think many other people are going to follow in that track unfortunately. so it's not looking good. >> it's remarkable because we're talking about an economy that has been struggling for three decades. when you look at spain just starting to enter this kind of period, the fact that japan is still struggling to fend off -- it's found almost almost in an equill will i be reup doesn't bode well for the rest of us. gentlem . >> japan's big problem is not a
big government. if you look at government spend to go gdp, it's probably a gold medal winner. but it is facing an unbalanced economy. when the export sector suffers -- perhaps there is a glimmer of light in the u.s. the u.s. is predicted to grow at 2%. that could support japan. but the biggest export partner is china and the real problem is not so much the island dispute, but the quite serious slowdown we're seeing in china. but it's considered it will slow
down quite considerably for the foreseeable future. so not a particularly good point. >> you raise a good point, how relaxed you can be when we don't know what will happen over the islands? >> we've had these spats before. island disputes are a fairly natural byproduct of a more as ser difference c assertive china. you have a leadership transition in china, in the u.s., you have a leadership transition in japan of course. my forecast is that once these transitions have taken place, things will come back and business will turn to normal until the next time there's a spate.
you but i don't expect this spate to get out of control to any greater extent than we've already seen. >> thanks for that. have a good evening. olympus says it plans to raise more than $600 million by issuing new shares to sony. the capital tie up is expected to strengthen the camera and medical equipment battered balance sheet. sony will also effectively become olympus' biggest shareholder. and heineken's two month pursuit has finally come to of a end after shareholders voted in favor of the deal. heineken ceo says it was looking forward to expanding across asia and beyond. >> we will expand further in asia as we have done in the past.
growing 6 percent year on year and also owning it in a while for 100%, we of course will commit ourses to development beyond asia in the rest of the world. heineken has a very large network to do so and we see very great potential there for the tiger brand in the years to come. >> meanwhile karlsburg has announced a joint venture with sinchea. >> and tiger beer coming to europe. they'll expand the brand to other regions. in other corporate new, research in motion posted its third straight quarterly loss, but it wasn't quite as bad as expected. rev you news still beat forecast as it increased both its subscriber base and cash position. shipments felling a the company prepares to launch new phones.
the ceo says r.i.m. will continue to face pressure as it works to promote the new devices. still he says the company is on track to debut the phone which is will run on the new blackberry 10 software early next year. shares up more than 20% after being heavily shorted in to that call. nikky's first quarter profits fell 12%. but still beat forecasts. futures orders a key indicator of demand were down 6% in china, but still up 8% worldwide. nikky shares lower on the news. down 3% after hours and greater than 3%, 3.25% in frank frankfurt trade. and facebook thinks it's better to give than to receive. it's launching a feature to let users send real gifts to their friends. facebook gifts will be rolled out gradually in the u.s.
a gift icon will show up on your friend's time line and they can unwrap it virtually and then on their doorstep a few days later. one of their first major pushes in to e xlers. the company will get a cut from each item sold and investors appear to applaud that sending shares up 1% after hours although down about 1.5 -- no down 1.5% yesterday and then adding 1% in after hours trading. are you not on facebook? >> not on facebook, you don't have an iphone. this is why we get along. >> we can never communicate any shape or form after we're off air. it's a perfect relationship. we'll take a break. still to come, holland, will he bow to pressure for greater austerity.
government of hollande is presenting its first budget
since coming to power. stefane is in paris at the budget ministry where this is all going on and joins us for more. what do you think is going to be the key plank in this budget? >> tax increases, ross. 20 billion euros of tax increases. this is what we're expecting for this budget 2013. and also 10 billion euros of spending cuts. that's the broad line for the budget. details will be announced later in the afternoon to the press, but it will be announced very shortly to a very small group of economies, group of happy few. and among them, senior economist of bnp paribas, you're about to go to the finance minister to see the details of this budget. we know that it will be focused on tax increases. do you think it e's the right c to increase taxes instead of reducing spending? >> obviously it's a good question.
budget tightening will be as much as 2% of gdp. so the idea is to add small negative impact on the economic activity as possible. and in order to get there, yes, it's certainly better idea to increase taxes than to cut expenditure. and this is one of the reasons for the choice of the government to raise taxes. the other reason is obviously political. >> one of the most symbolic decisions will be to implement a new tax rate, 75% for people earning more than 1 million euros a year. it's very symbolic, but can you understand that rich people want to leave the country? >> yes, we can understand that. certainly the impact in terms of major front is negative and that is a concern. the idea of the government is first to fulfilful the promisfi
promises made. and they have tried to make these measures as light as possible.made. and they have tried to make these measures as light as possible. make the tax a temporary one for just two years. >> the budget is based on a growth sulassumption of 0.8%. is that too optimistic? >> a little, i agree, but there are plenty of uncertainties in europe today. we don't really know what the future will be made of. and so it's not completely impossible to reach and we can't say it's overly optimistic. and making the entire budget -- >> there are doubts that spain will not be able to reach its
deficit target this year. what about do you think france will meet its 4.5% this year and 3% next year? >> yes, i do think france will meet the 4.5% this year. a few measures have already been decided back in july. it's possible that more is needed. if more is needed and they have the means to meet this year. it's not the big issue. 3% next year is something much more difficult. as i said, it's already in the budget two percentage points tightening. it will be difficult to go really beyond this. at the end of the day, i think they will be keen to deliver what europe is expecting. so if ever the target happens to change a little bit given the
economic background in europe, maybe we could have a slightover shooting in terms of budget deficit. but direction of the policy is clear. >> prime minister saying the 3% deficit target was compulsory because failing to reach the deficit would expose france to a very difficult situation on the bond market. >> yes, he knows that very well. no doubt 3% is compulsory. and if necessary, the government will take the necessary steps in order to there been by the end of next year. >> thank you very much for being with us. we'll leave you going to that important meet to go have the debails of the budget. more taxes for the french
people. 30 billion euros in measures in total. most significant since the second world war. we'll get you the details later. >> stefane, thanks very much. >> we'll take a short break. still to come, plenty to talk about. we'll talk about spain and we're also going to find out as spain eight was results of the bank stress test, find out what i have in common with the spanish prime minister mario rajoy. bob...
oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. save 50% on banners.
european stocks trading higher as investors wait the results of a spanish bank stress test that could put the recap bill at more than 60 billion euros. plus the latest budget in in paris. can hollande bring the deficit down without damaging growth. >> r.i.m. rallies as the struggling blackberry maker posted another quarterly loss but it wasn't as bad as expected. and consumer prices slip further in august raising fears
the world's third biggest economy could fall into recession by the end of the year p. year. . we're at the end of the quarter. u.s. markets trying to finish onnen a up note. nasdaq this quarter at least as of yesterday was the outperformer of the three indexes. the s&p 500 over here, 1441 is the level to keep an eye on. the dow jones industrial average is up now for three out of the last four quarters. keep an eye on what's happening across the globe because as we know, the gains are tenuous. global 300 up a quarter of a% this morning. again, we're kind of buffeted by asia europe growth concerns. stimulus on the one happened, signs of a slowdown on the
other. ftse 100 adding a third of a percent. cac 40of a slowdown on the othe. ftse 100 adding a third of a percent. cac 40 a little higher. reminder that er ther that for year, stocks still have performed reasonably well given if you had told people the news flow going into the year and asked where stocks would be, i doubt they would say up 10%. >> and the ibex is up 10% for the quarter. so doing pretty well. let's show you where we stand right now as far as ten year bund yields are concerned. key point spanish yields still around the 6% level. ten year treasuries, 1.63 is what we're currently yielding at the moment. euro glar sort of low 1.28 a
couple sessions ago. dollar-yen 77.59. sterling's had a pretty good month against the dollar. we hit the highs for the year earlier this month. let's key cap the asian trading session. >> most asian bourses ended higher on relief over spain's budget plan.>> most asian bours higher on relief over spain's budget plan.session. >> most asian bourses ended higher on relief over spain's budget plan. shanghai composite rallied ending higher by 1.5%. bank, developers and resources all gained on hopes of more easing moves. we'll get hsbc final manufacturing over the next three day, but the mainland bourses will be shut for the whole next week for national day celebrations. hong kong market is closed for the first two days next week.
sensex wrapped up the week in the green, but the nikkei was the laggard closed at the two week low. the index that tracks companies with high which possee exposure shed. in south core re, a samsung and hyundai supported the kospi. australian market ended about flat as investors took profit on defensive plays. european policymakers, made grid's budget a major step towards recovery, but today the government must brace for the results of the banking stress tests. teach sedgwick has been following the story for us all week out of madrid.
steve, good morning. sounds like we may not know the results of the stress tests until well after the afternoon. >> yesterday i had an interesting question, he said what time is the budget due. i said about an hour and a half ago. and that's the problem with communication here in spain. we don't get finite times of when things will happen until very often after they've started. in the end of course we got the spanish budget announcement somewhere in the region of 5:00 p.m. local time having been told the press conference will be at 1:30. so after market seems to be the consensus at the moment. when that means could mean up until monday, i guess. but in terms of the stress test itself, i wouldn't get too worked up about it. yes, it will show that the banks potentially will borrow money, but they don't need as much as feared. of course the expectation is from early analysis and indeed
from the auditors that it will be somewhere in the region of 60 billion euros. but this can only ever be a snapshot of the current time. it tells nothing about the loan losses and even this week we've seen loans losses increase to 9.9% it doesn't tell you how much the banks can raise on the private market and how much they'll have to take down losses on their bad assets which will then be placed in the bad banks. so, yes, it is a bottom up approach but it can be no more than a snapshot in time as far as i can see. >> okay. stick around. because while the bailout watch continues, rajoy has been keeping his cool with the help of a good smoke. the spanish prime minister pictured lighting up cigar walking on the streets of new york. this image was taken on thursday. it's caused outrage in spain.
ended up on the front pages of the national press yesterday. at that time rajoy was going to add another 20 billion in cuts. former assistant of commerce for george h.w. bush and special assistant to ronald reagan. not the best image management. you specialize in crisis management. some compare to marie antoine e antoinette. all these cuts coming on and he's walking around smoking a stogy. >> a woman is a woman, because good cigar is a smoke, i say. >> you you may say that, but doesn't go down very well. >> you can't smoke inside, so i guess he figured he had to take the opportunity. it probably isn't the best image for a national figure to be smoking at all let along in public, let alone during a crisis, let alone on the streets of man hat continue. let's put a positive spin on it. perhaps it is his way of helping control his nerves.
>> this is a prime minister that come and has promised all sorts of things when he got elected. once that starts happening, how on earth do you control it from a crisis management pr perspective? >> if we could control it, we'd all be rich. what we tried to do, what i'm sure his advisers are trying to do is to keep him cool, keep him focused. they've made a lot of announcements in the last day with respect to the budget, with respect to pensions, with respect to civil service salaries. taxing the lottery winnings now. he mass a lot on his plate. the twi advice will be keep it cool and
calm. >> here you sort of finally get a moment where he's captured on the world stage and he's smoking a cigar. that's part of the problem. and certainly not an intentional action, but came off that way. >> he probably needed the break and that's the way it comes over, isn't it, steve. >> what on earth have we come toe when we are criticizing leaders for smoking a cigar? didn't jfk smoke? of course clinton, a very famous cigar smoker and all it implications there. and what about winston churchill, without his cigar, the icon wouldn't be quite the same. it's unfortunate that now you can't even smoke a cigar this public if you're a public figure. next you'll be saying the king of spain can't go elephant shooting. i don't know what the world's come to. >> should he go elephant shooting? >> probably not.
>> no, he shouldn't, but he got caught doing that earlier this year. >> that's the point of the modern world. came back from a football match and the press wrote up the amount of money they spent on the lunch on his private jet. and the food bills and everything. you get called out for everything. >> yes. there was a story in the american newspapers yesterday about a new book about the presidential monarchy in america. and how many multiples of expense we spend on on our president in a year versus the british spending on their royal family. and i think it's quadruple. so it's a tough time in a period of austerity to be a public figure. >> none of it matters in the numbers whether any of it deflects them from pursuing the policies that need to be pursued. >> or deflects people from pursuing office. we joked around the french
elections who would want this job. and if you increasingly look around at the kind of leaders that you want and the kind that are likely to sort of go after the position at this point, it certainly won't encourage people to step forward. >> who would want to be u.s. president? >> there's no short of people. and the 2016 campaign has already begun. >> 2016 is probably a better one to win. >> well, you never know. >> good to have you on. you're sticking around. steve, thank you. you haven't got a light, have you, steve? >> no, do you want me to go get you a pack of panama? what was those cigarettes you used to smoke? >> i think this is -- i don't think i can say what this is. >> he already has a cigar over here. >> steve doesn't have a return feed. >> last time i had one of those with was our dear friend guy johnson and it didn't end prettily. >> rarely does.
steve, thanks very much indeed for that. i'm now not going to get reelected holding one of those up. i'm not running so it doesn't really matter. talking about our politicians, i won der if pierce stein brooke smokes in public. likely to be the german social leadership candidacy for the chancellor ship. well keep our eyes on any reaction to that. >> a drunk trader has been blamed for an oil price spike of more than $1.50 a barrel back in june 2009. steefr p steve perkins allegedly spent $520 million on oils futures contracts while intoxicated. he's been fined 72,000 pounds as
a result and been suspended for five years. the fine pails in comparison with what was put at risk. wh what do you think about the story? tweet us @cnbcwex and also reach us directly. >> meanwhile still to come, the count is on until next week's first u.s. presidential debate. even as they continue to hit at each other on the road. so who has the inside track heading into wednesday? bob... oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty.
here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.
these are your headlines. european stocks trading higher as investors a wait the results of the spanish bank stress test. and r.i.m. rallies more than 20% as the blackberry maker posts smaller than expected loss. showing you pictures from the press conference happening with fsa chair martin wheatley. after they announced a revamp of libor. katherine boyle is there putting a question to him. if she gets a chance, we'll
bring you any market moving news as we get it. mitt romney campaigns in the philadelphia area today which a republican hasn't won in nearly 25 years. pennsylvania, that is. president obama sticks close to washington today, though, with three fund-raising events. both men were in virginia yesterday catering to the state's strong u.s. military and defense industry presence. mary jo is still with us. is mitt romney in pennsylvania because he thinks there's a chance? how important is winning pennsylvania to him? >> pennsylvania is one of several battleground states in this election and it comes town really to a handful of states including ohio and florida and of course pennsylvania and virginia. the undecided vote so far is very small, but let's keep in mind at this stage ronald reagan in 1980 was running about five
points behind jimmy carter. by mid october, he was 13 points behind and yet he won the election by nine points. >> what do you think will be that catalyst for swinging things in mitt romney's favor? >> a strong debate by mitt romney. there are three of them coming up. a misstep by the president. some sort of international incident to thinks that might come out about benghazi, et cetera. i mean, six weeks is a very long time. we have 39 days to go. >> it's fascinating how much pressure seems to be on mitt romney including put by himself and his own camp on these debates. we haven't necessarily seen him perform well under pressure, when you go back to the press conference in the wake of the attacks you referenced. >> he had remember 20 debates during the primary season and the president of course as the incumbent had none. so debating is a more recently honed skill for mitt romney and he did do well in some of those
debates. a lot of the later debates in particular. so it's fresh in his mind. it's a good nor matt for him. and he's getting a lot of rehearsal. and the obama side saying all the terrible things that the president could do for example fall getting on the stage or falling off the stage, he's not kennedy, he's not clinton, he's not reagan. >> we had a view expressed this way that it there are no real swing votes and it will come down to who with can mobilize t own voters to get out. >> the swing is very small if at all. i think that a lot of people who say they're undecided aren't in fact. they're choose to go say -- not to say what they feel for whatever reason. and it will come down to turnout. something that's interesting on turnout this time, in 2008, president obama then senator electrified university campuses all across the united states and
young people turned out. this time not so much. i've seen a number of polls on university campuses that they're pretty apathetic about the whole thing this time. so it will come down to turnout. and low turnout on the democrat side of course helps republicans because republicans vote no matter what. >> no matter what. >> no matter what. i'm voting on the 27th of october. >> no matter what. >> who are you voting for, do we know? >> i couldn't possibly say. >> mary jo will stick away. she did work for ronald reagan and george h.w. bush, as well. in other news, israeli prime minister benjamin netanyahu has issued a warning that the nuclear program must be stopped and limitses need to be drawn up to allow time for facilities to be dismantled. >> a red line should be drawn right here.
before, before iran completes the second stage of nuke checle enrichment necessary to make a bomb. before iran gets to the point where it's a few months away or a few weeks away from amassing enough to make a nuclear weapon. >> you know it strikes me i swear i think he drew the line in the wrong spot. because if you listen to what he says, he says we have to draw the line before we get to 90%. but he drew it too high. he drew it after 90%. so he comes out there with this thing and the red pen and i actually think he meant to draw it at that 70% threshold meaning before we get to the point that we've gotten close enough that they've been able to make the bomb. he says we have to reach it before they reach this stage. or there's something weird about that. >> the tom and jerry design of
the nuclear bomb i've got an issue with, as well, but i think we get the point. it is quite serious. >> ac mcht krchlacme nuclear we. >> exactly. >> we hit 117 on brent a new days ago. nymex back up to 92.58. >> and we will switch gears and get a record card on the investment banking center, an exclusive look at the third quarter as it comes to a close. who is on top? we'll find out next.
third quarter wraps up today and while equity markets have performed well, investment banks are still struggling with falling revenue from fees and underwriting. just how do they stack up? joining us now with the first look is matthew tool from thompson roson reuters. so what areas are we actually seeing significant activity? >> we're seeing really two tracks with the deal making for the first nine months of the year. obviously the corporate bond markets are on oipo
activity is really kind of treading we're at almost a ten year low. m&a fees have fallen by almost a quarter. >> which is remarkable and makes you wonder what the future will be for a lot of these business models. is there a sense that this is part of a longer term issue with activity in these markets? >> i think we're seeing kind of dual track activity on the deal making side. we're seeing opportunistic activity, so cross border m&a, private equity coming in fueled by the debt markets and the record kind of corporate bond issuance that we've seen this year. on the negative side from an opportunity perspective, ipos have been affected by the volatility in the equity markets. facebook had a very chilling effect on the u.s. ipo market. but what we're missing is the ambitious deal making. the loss cross border deals which are really bound by confidence.
and so we're not seeing kind of the multibillion-dollar transactions that have really been kind of the hallmark of a rebound in a and a beingm and a. >> we're trying to get the british air space deal through, but that has more hurdles than you can shake a stick at. >> that's right. regulation, headline risk, we've seen over the past two years some rather large transactions actually shot down by regulatory concerns like at&t, t-mobile, the new york stock exchange. so perhaps changes in the u.s. presidential election or some actually specific regulations would allay some of those fears. but, yeah, there's a lot of hurdles to some of that ambitious deal making and some of that is certainly driven by headline risk and just overall macroeconomic factors. >> who is winning in the shrinking market? >> we've seen goldman sachs consolidate their power across all regions. they're leading worldwide m&a as
well as m&a in the u.s., europe and asia pacific. so they have really not seen any kind of loss to their business over the past couple of years. obviously they have been kind of the leader in m&a over the last decade or so. from a capital markets perspective, we're seeing the big bond houses come through. jpmorgan, citi, barclays, deutsche bank and we're seeing increased fees on the debt capital market side, up 14% over last year, which will bode well for those kind of traditional bond houses as they report earnings next quarter. >> matthew tool, thank you very much for joining us this morning. >> all-time low average on high yield debt activity. >> it's been on a tear. absolute tear. and you get the sense it that it's not over yet. >> still to come, we'll also have a look at how the u.s. economy is fairing the lead up to the presidential election and it's tee time in chicago.
>> you like any kind of tee time. we'll leave you with a look at how futures are trading.
european stocks trade higher as investors a wait the results
of a stress test that could put recap at about 60 billion euros. >> plus the latest budget in paris. will hollande bring the deficit down without damaging growth. >> and r.i.m. posts another quarterly loss, but it wasn't quite as bad as expected. we're nearing the end of the quarter, so let's put the quarter in contest for you. dow jones industrial average has been up something in the range of 6% to 10% if i recall correctly. best performer of the three is the nasdaq. the laggards for that in-dekt if we go back and look at the weak performers were tech, hewlett-packard and intel down
14% roughly. s&p 500 one of the weakest performers is amd. the nasdaq one of the better performers is can going he will. so a quarter in the green. they are trying to finish in the green today. third quarter out of four that we've seen them move to the up side. we're up about a quarter of a% on the ftse 100. haven't seen too much movement across the globe. european markets pretty much sitting at 0.4%. cac 40 rebounding up 0.2%. ibex moving higher. >> and ahead of the u.s. open that's where we stand. here's the thoughts of some of our guests already today.
>> i think overall you are seeing still a premium in sterling versus the euro definite definitely. currently is still performing as a haven as an alternative to the euro for sophisticated longer term investors. >> i think on a relative value basis, we see a little risk on in the short term, but european markets underperforming the u.s. >> in this environment, i'm a reluctant supporter of kuwaequi. you look at what we have, where bond yields are, where credit has gone over the course of the last six, eight months, you have to end up saying equities are
the best of a band bunch. >> an improvement in the pace of job let claim filings. so just how much momentum is the world's juggernaut economy carrying into the fourth quarter? drew mattes joins us in studio. thanks for coming by. what is your view on the u.s. economy, how much momentum really is there as we look into the fourth quarter and next year? >> you're looking at growth in the fourth quarter probably not going to breach 2%. we're just going to have to learn to live with that. and as much as the job rest claims numbers are good news, we still haven't seen the pick up in hiring. so until we see that, i don't
think you can get that much momentum. sdl they 00 a discussion about stall speed. are we headed in to recession or do we expect to slug it out here? >> what we found is the volatility of growth is significantly lower in the recovery. sos as much as growth is lower, the volatility has fallen off much more take dramatically. so if there is a stall speed, it's a much lower rate than we've seen in the past. the most obvious way you know you're going into a recession and said partly tongue in cheek is when you have a quarter of negative growth, that implies there's a good chance you're going into recession. anything above that is really not too worrisome. you don't know it until you know it. >> a lot of people do talk about this stall speed. why don't you believe it? >> because the natural state of any economy is to grow. if you have positive population growth, any productivity growth
whatsoever that's not minus 2, your which i will naturally be moving forward, not backward. >> i think it's a natural consequence of a deleveraging story, that we're still going through. it is not to say that -- what that means is it won't persist indefinitely. once we get through the deleveraging process, which may take another year or two, we will see a more normalized growth rates. >> what is your view of qe-3? because pippa yesterday said it would make things worse because it drives up asset prices in terms of commodities and therefore you've got more of this sort of inflation for the consumer. that it's not just -- at best it's not know impact, at worse it has a damaging impact.
>> we have said that qe-3 is a losing game because they're trying to boost asset prices and when they boost asset prices, they're thinking equities. and when the market is thinking asset prices, they're thinking commodities. and if you look at how the u.s. consumer is structured -- >> alternatively, you could argue the fed has acted aggressively in a period of fiscal contraction and perhaps a period where the economy might have been losing enough to seeming vulnerable to a negative period of growth. >> you you could argue that if the fed knows what will happen in the future, but i haven't seen that the fed is any better using their krystal ball than i am at mine. >> that's for sure temperature drew, thanks very much for coming by this morning. >> how long were you on the fed thing? his next a career move. >> i don't think they'll be talking to me, let alone thinking about putting me there.
still to come on the program this morning, teeing up a transatlantic rivalry. can the u.s. bring it against defending european ryder cup champs. >> it's happening this morning. rory mcilroy. bob... oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.
plenty of focus in spain as they've announced their budget. 40 billion in total of tax hikes and spending cuts. ibex weakness in the last couple of weeks, spanish market over the third quarter here, 10.8%. pretty comparable with what the dow has done every on the course of the year. another big gainer has been sterling. we saw just a week or so ago it hit its highs against the dollar. and over that period, as well, most of this from the beginning of all, up 3.29%. i know that that pound appreciation against the dollar is something that really warms the cockles of kelly's heart.
>> i was hoping i would get under 1 1/2, my structural long dollar trade. in any case, you're watching worldwide exchange and these are your headlines. european stocks trade he higher as investor as wait the results of spanish bank stress tests. france's latest budget is being submitted to president hollande. and r.i.m. rallies more than 20% as the blackberry maker posts smaller than expected loss. >> rest of the day doesn't really matter. i just close out all your positions and if you can't get on a plane to chicago, turn the tv on on because the ryder cup is in full swing today at medina, european team looking to defend the title against the americans. they'll be led by rory mcilroy. 39th competition. they tee off 1:20 today uk london time. so that's 7:20 chicago time.
>> i just heard there's an interview we need to you do at about 1:30 if you could just make yourself available for that. >> rory's busy at that particular moment. he won't want to talk to me. but will he be one up by 7:30. joining us for a look ahead is cla simon claire. simon, first match today, i know ro rory mcilroy and graham mcdowell. >> they are the underdog overall, but the forces give a good chance. mcdowell on favor five to six. snedeker is in great form. >> great putter.
>> i think putting will be the key. they do seem to have the edge on that. >> why are the europeans the underdog? i had to look up a little on the ryder cup not knowing much about it myself and europe had really had momentum. they haven't lost in europe since 1993. so what is this time around that's giving the americans the favor? >> this is what makes the ryder cup compel ppg t. highest field we've ever had. so on paper, usa have the better putting records, they're at home. get the chicago crowd roaring. so they're the favorites. but if you look at the record, europe's won four, three times the underdogs. they keep overturning the odds. exceptional talent. better ryder cup records. it couldn't be better.
>> isn't the emotion on the european side because of sevi? wasn't a dry eye in the place. so what factor will that be on these players? >> a huge factor. the team spirit and the european attitudes have always been to their advantage. always the weakness in the american cap. even though he won't be there, but you have his presence, will be huge. you have garcia back in the team after his absence last time. so it's the emotion and psyche of the europeans which will give them a real good chance. >> and we saw some of that in the opening ceremony. so this is an event after just having come from the olympic, ryder cup has its own version, but sounds like didn't exactly knock people's socks off. >> the last match today is tiger woods against ian. there's a bit of needle on that one. so is woods favored to pick up more points than anybody else?
>> he is. he doesn't have the greatest ryder cup record overall, but i think he's a different man now. all the money's for him. he's a 9:2 to be the top american sports scorer. >> how much are people betting on this event? >> it's very popular. a lot of people are banking on on the outright. the most compelling bit is through it. it will ebb and flow and there's betting throughout. many pounds by the end of the tournament on sunday. >> and it's the one tournament where literally from the first shot it matters. in a four round tournament, that's not the case. >> and no money on the line. >> right, for the players. >> the name sake, eches the guy who invented the little seed packets and commercialized the business.
>> thanks very much indeed, simon. who do you think personally will win is this. >> i think europe are amazing once again. i think the experience will carry them to victory. >> where is your money? >> i hate to say it, but i think europe. >> then i'll have to go for team usa. my in-experience, i guarantee will give me the edge. >> it will come down to a point i think. it will be a very slow. and of course nbc covering it, as well. so it will be fantastic. in corporate new, research in motion posted its third straight quarterly loss. wasn't as bad as expected, though. revenues down 31%, but still topped forecasts. they increased both subscriber base and cash position. ceo says r.i.m. will continue to promote new devices and is still on track to debut the phone which is will run on blackberry 10 software early next year. and shares up more than 20% in
after hours trade. hines will be joining "squawk box" at 8:00 a.m. eastern. you won't want to miss that. nike first quarter profits fell 20% on slowing growth in china. sal sales were up 8%. future orders a key indicator of demand was down 6% in china, although it was up 8% worldwide. nike shares if you look at frankfurt trade, they're down a little over 3% this morning. and facebook thinks it's better to give than receive. the social networking site is laufshlging a feature to let users send real gifts to their friends. it's being rolled out gradually in the u.s. and a sgift icon will show up on your friend's time line which they can unwrap virtually. the actual gift will show up a few days later. the company will get a cut from each item sold. investors appear to like that. shares were up more than a% in
after hours trade. and stick around, because still to come on the program, u.s. markets may have blindsided investors with decent performance in the third quarter. our next guest says that run could be limited.
stocks turning mixed. ftse 100 and xetra dax just up 0.2%. >> u.s. futures trying to hold on to their gains as we close out the quarter. in the u.s., august personal income and spending data out at 8:30 a.m. income is expected to gain 0 .2,
spending 0.25%. chicago pmi figures one to watch. and then the final read on september consumer sentiment which has been surprisingly solid in the wake of higher gas prices. usda will release quarterly grain outlook. and corporate side, walgreen's, american greetings and finish line all report results. and as mentioned, dow looking to add -- we were up about ten points earlier, now down about six. so perhaps it won't be a positive finish here for the end of the quarter. steve wood from russell investments, should we make you call the close here today? >> perhaps, yeah. >> what broadly speaking has driven the market do you think in the third quarter and can we expect a rally to sustain as we move into october and beyond? >> i think it will be choppy. it's anticipation not only of qe infinity, but i think a globally coordinated monetary easing cycle. europeans will eventually have
to nonsterilize their intervention and the slowdown very dramatic. and the response of the chinese government to that slow down will be very significant. so you could see for the first time since 2008, 2009, u.s., europe and the chinese responding very significant way p about i think that's giving the market something to price in and push it up. >> when you look at year to date performers, investors would have gladly taken those at the beginning of the year. >> and when you come into the year, we were looking at it being a positive year and we prefer the u.s. to europe. but it's been a very good year, very brisk and i think a lot of that is not only quantitative easing, you but in the united states, the economy is not going into a double diprecession, but it won't be brisk either. so you haven't seen that much of a big of a difference to cause -- >> at what point do you take all that positive news into account, the easing cycles and whatnot, is that already priced in, have
we made the 3wu8 beibulk of the already? >> i would not be surprised if the market ends a little bit down here the end of the year. use it as an opportunity to reallocate. i would think regionally you want to be careful. you need to look company by company. this is going to be security selection. stock picking environment. >> is it a stock pickers market? that rant really been the case. >> playing the indices. >> spanish ten year tells you what will happen, but do you think that's still the opportunity to identify strong be investments? >> if you're looking at cross sectional volatility, you're seeing correlations coming down. so you can asset allocate. so there are differences between names, balance sheets. if you look in europe, there are great companies in europe. selling at a significant discount on the continent. >> you've jeust been in spain ad we're waiting to see how much
more money they have to pump into the banks. what's your takeaway from that trip in terms of how it influences your thoughts? >> i was in the south end, remarkably peaceful. the demonstrations that were in madrid, i did not see in the south. but there's a real sea change now in europe and you can feel that in spain, as well. they know they're moving into something good. so i think it will be very, very interesting how that will roll out. >> steve, thanks for that. mary jo, just a final thought from you. what are you focusing on? >> next week's debate. >> wednesday. you're watching the ryder cup, we're all watching president obama and mitt romney taking the stage. >> steve, mary jo, thank you so much. >> that's it for us today. i'm kelly evans. >> and you're not here next week. >> no, i've got several days off. >> i'm on my own. have a great weekend.
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euro crisis as global stocks come rally after spain announces major budget returns. today president hollande unveiling his country's plan, reportedly set to include a 75% tax for high earners. libor overhaul, the uk's top regulator plans to aggressively change the way banks set interest rates. and the third quarter comes to a close. the s&p snapping a five day slump as the bulls try to end september in style. it is friday, september 28th, only 30 days i'm told this
month, 2012. and "squawk box" begins right now. >> it's been a strong september for stocks. let's take a look at the third quarter returns. the dow is up 4.7%. s&p 500 is up 6.2%. and the nasdaq has a gain of nearly 7%. throughout the morning, we'll be focusing on what the fourth quarter holds. general electric at levels not seen since october of 2008. discover financial is trading at all-time high levels.